<div dir="ltr" style="text-align: left;" trbidi="on"><br /><h1><span class="chapter-titlelabel">Chapter 1: </span>Writing Well For Business</h1><h2>Some General Guidelines</h2><h3>Know why you're writing. </h3><div class="first-para">Before you begin writing, know what you want to say – and why you want to say it. Are you explaining a situation or a problem? Are you trying to convince the reader of something? Are you recommending a course of action? One way to ensure you know why you’re writing is to make an outline of your main points beforehand.</div><div class="last-para">By always remembering your purpose in writing, you’ll keep yourself from wandering off track. You’ll also avoid confusing the reader. If you don’t understand what you’re trying to say, how can you expect the reader to?</div><h3>Know your audience.</h3><div class="first-para">Effective writing of all kinds is tailored to its audience. Who – and how many people – will be reading the document? How familiar are they with the subject matter? Make sure the answers to these questions fit with the tone and level of detail you include in your document.</div><div class="para">Another key is knowing how long your reader or readers will have to read your memo, report, or email. This will help determine its length. One frequently used guideline is one double-spaced page per minute.</div><div class="last-para">You also need to consider how much information to include to meet your readers’ needs. Put yourself in their shoes: What are they looking for? What questions might they ask?</div><h3>Present the most important points first.</h3><div class="first-para">A business report is not a murder mystery; your reader shouldn’t have to guess what the conclusion will be. Present the most important point(s) at the beginning of your document; then use the paragraphs and sections that follow to support your conclusion.</div><div class="last-para">The same goes for paragraphs and sections within the document. At the beginning of each new paragraph or section, state the main point. Then present the explanation or supporting details, preferably in descending order of importance. This theory works for individual sentences, too: Placing the most important words at the beginning and end of a sentence heightens their emphasis.</div><h3>Be clear and concise.</h3><div class="first-para">The first key to being concise is eliminating unnecessary information. Stepping away from your document and coming back to it later can help you be more objective about what is and isn’t needed to convey your message.</div><div class="para">The second key is eliminating unnecessary words. Qualifiers such as <i>very, fairly,</i> and<i> quite</i> rarely add meaning. In fact, because they’re so overused, they often have the opposite effect.</div><div class="para">Many commonly used phrases include useless words. Some wordy phrases and their replacements are listed below:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para"><b>Replace:</b></div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para"><b>With:</b></div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">along the lines of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">like</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">a majority of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">most</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">a majority of the time</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">usually</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">as a general rule</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">generally</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">as per</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">as, according to</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">as soon as</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">when</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">at your earliest convenience</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">soon or by <i>x</i> date</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">as you may or may not know</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">as you may know</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">at a later date</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">later</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">at all times</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">always</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">at this point in time</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">now</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">avail oneself of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">use</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">by means of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">by</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">can be in a position to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">can</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">due to the fact that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">during the time that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">while</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">for the purpose of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">for</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">free of charge</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">free</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">have a tendency to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">tend to</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">inasmuch as</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in accordance with</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">according to</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in advance of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">before</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in all probability</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">probably</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in connection with</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in many instances</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">often</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in order that, in order to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">to</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in reference to, in regard to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in spite of the fact that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">although</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in the amount of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">for</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in the event that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">if</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in the matter of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in the near future</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">soon</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in this day and age</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">nowadays, now</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">in view of the fact that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">make a recommendation that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">recommend</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">of a confidential nature</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">confidential</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">on account of the fact that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">on the grounds that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">owing to the fact that</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">perform an analysis of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">analyze</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">pertaining to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">prior to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">before</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">pursuant to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">since</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">the question as to whether</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">whether</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">regarding the matter of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">subsequent to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">after, since</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">the writer, the undersigned</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">I, me</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">up to this writing</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">until now</div></td></tr></tbody></table><div class="para">Other phrases are redundant:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para"><b>Replace:</b></div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para"><b>With:</b></div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">absolutely perfect</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">perfect</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">actual experience</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">experience</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">adding together</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">adding</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">advance planning</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">planning</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">and et cetera</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">et cetera</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">any and all</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">all</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">at about</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">about</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">basic essentials or basic fundamentals</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">basics, essentials, fundamentals</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">both together</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">together</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">cancel out</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">cancel</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">check into</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">check</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">close proximity</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">near</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">combine into one</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">combine</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">complete stop</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">stop</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">completely full</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">full</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">consensus of opinion</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">consensus</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">continue on</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">continue</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">cooperate together</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">cooperate</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">current status</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">status</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">customary practice</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">practice</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">desirable benefits</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">benefits</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">each and every</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">each or every</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">end result</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">result</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">enter into</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">enter</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">exactly equal</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">equal</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">final outcome</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">outcome</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">first and foremost</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">first</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">first priority</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">priority</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">free gift</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">gift</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">future projections</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">projections</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">goals and objectives</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">goals</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">group meeting</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">meeting</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">honest truth</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">truth</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">joined together</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">joined</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">new innovation</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">innovation</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">no doubt but</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">no doubt</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">one and the same</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">the same</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">outside of</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">outside</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">over with</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">over</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">past experience</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">experience</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">past history</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">history</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">personal opinion</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">opinion</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">point in time</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">time</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">range all the way from</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">range from</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">the reason is because</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">the reason is or because</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">reduce down</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">reduce</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">refer back to</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">refer to</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">repeat again</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">repeat</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">resume again</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">resume</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">small/large in size</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">small/large</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">totally empty</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">empty</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">this particular instance</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">this instance</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">3 a.m. in the morning; 3 p.m. in the afternoon</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">3 a.m., 3 p.m.</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">whether or not</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">whether</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">young in age</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">young</div></td></tr></tbody></table><div class="para">The third key to being clear and concise is using short sentences and paragraphs. Try to keep <br /><a name='more'></a>sentences to between 20 and 25 words. Or simply break up sentences that extend more than two lines. In general, no paragraph should include more than one or two ideas, and a paragraph of more than six sentences or 10 to 12 lines is almost always too long. When in doubt, split paragraphs in two at logical breaking points. The same goes for sentences.</div><div class="last-para">You don’t want your writing to sound stilted. Varying sentence length and structure can help prevent this. Read your writing out loud to make sure it sounds natural.<br /><br /></div><h3>Use simple, specific language.</h3><div class="first-para">Some people think using complex language makes them appear intelligent; in reality, it only obscures their point and makes them look pretentious. Effective writers use simple words such as <i>start</i> instead of <i>commence</i>, <i>help</i> instead of<i> assist</i>, and <i>end</i> rather than <i>terminate.</i></div><div class="para">Here are some unnecessarily large words and their replacements:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para"><b>Replace:</b></div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para"><b>With:</b></div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">abbreviate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">shorten</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">advise</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">tell</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">ascertain</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">find out</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">assist</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">help</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">commence</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">start</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">conceptualize</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">conceive</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">conjecture</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">guess</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">demonstrate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">show</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">duplicate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">copy</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">expedite</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">speed</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">facilitate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">help</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">functionality</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">features, functions, capabilities</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">indicate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">say, show</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">initiate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">begin</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">nevertheless</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">but, even so</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">obtain</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">get</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">optimum</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">best</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">orientate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">orient</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">receive</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">get</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">terminate</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">end, fire</div></td></tr><tr><td style="padding: 0.75pt; width: 332px;" valign="top" width="52%"><div class="table-para">utilize</div></td><td style="padding: 0.75pt; width: 305px;" valign="top" width="48%"><div class="table-para">use</div></td></tr></tbody></table><div class="para">Here are some phrases that were once commonplace, but now appear stiff and affected. Avoid or eliminate them:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">beg to inform</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">in due course of time</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">in receipt of</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it has been deemed necessary</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">it has been demonstrated that</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it has been shown that</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">it is found that</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it is recognized that</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">it is the intention of this writer to</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it is worthy of note</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">it may be seen that</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it must be remembered that</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">permit me to say</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">please be advised that</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">pursuant to</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">what is known as</div></td></tr></tbody></table><div class="para">Also avoid clichés such as:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">back to square one</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">back to basics</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">ballpark figure</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">beyond the shadow of a doubt</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">first and foremost</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">hit the nail on the head</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">last but not least</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">state of the art</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">take the ball and run with it</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">under review</div></td></tr></tbody></table><div class="last-para">Finally, good writers also choose concrete words and specific examples over abstract, vague language. <i>A watch that allows you to send email</i> is a much clearer description than <i>an IP- enabled wristwatch.</i> One trick is to write the way you talk. If something doesn’t sound right when you read it out loud, change it.</div><h3>Avoid jargon.</h3><div class="first-para">Jargon is vocabulary that is specific to an industry or group of people. Because specialized language and technical terms can be confusing, it’s best to avoid them, even for the savviest of audiences. Try this as a guideline: Use jargon only if you are completely confident that nearly every one of your readers – say, nine out of ten – will understand it.</div><div class="para">In addition, certain words and phrases come in and out of fashion. Because not everyone will understand them, and they might mean different things to different people, try to avoid them. Faddish words and phrases include:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">actionable items</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">bottom line (as noun or verb)</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">cutting edge</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">deliverables</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">dialogue (as a verb)</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">hands on</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">interface (as a verb)</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">proactive</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">repurpose</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">skill set</div></td></tr></tbody></table><h3>Don’t hedge.</h3><div class="first-para">Don’t use wishy-washy language because you don’t know exactly what you want to say or because you fear people will disagree with you.</div><div class="para">The following words and phrases are red flags that you are hedging:</div><table border="1" cellpadding="0" class="MsoNormalTable" style="width: 651px;"><tbody><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">practically</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">Pretty</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">probably</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">Rather</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">seemingly</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">Somewhat</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">very</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">Virtually</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">as I recall</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">as I understand it</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">for all intents and purposes</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">I imagine</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">I would guess that</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">in some cases</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">is considered to be</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">it is my observation that</div></td></tr><tr><td style="padding: 0.75pt; width: 319px;" valign="top" width="50%"><div class="table-para">it is my opinion that</div></td><td style="padding: 0.75pt; width: 318px;" valign="top" width="50%"><div class="table-para">for the most part</div></td></tr></tbody></table><div class="last-para">may or may not be my best guess is that to the best of my recollection under the circumstances</div><h3>Use active rather than passive voice.</h3><div class="first-para">In a sentence in the active voice, the subject performs the action. In a sentence in the passive voice, the subject receives the action.</div><div class="first-para"><i>Active voice:</i> We paid close attention to the consumers comments.</div><div class="last-para"><i>Passive voice:</i> Close attention was paid to the consumers comments.</div><div class="para">Sentences in the passive voice tend to be duller, longer, and harder to understand than those in the active voice. They use forms of the helping verb <i>to be (is, was, were, has been, have been, shall be, will be, shall have been, will have been)</i> and phrases beginning with <i>by</i>. Active voice, in contrast, makes writing more energetic and forceful. <i>I used the active voice to write this book</i> sounds better than <i>The active voice was used by me in writing this book.</i></div><div class="para">If you can’t figure out how to put an idea into active voice, figure out who or what is doing the action and make that the subject of the sentence. To identify sentences in passive voice, look for those helping verbs and phrases beginning with <i>by</i>.</div><div class="para">There is one instance in which you might want to use passive voice on purpose: when you are trying to de-emphasize the subject. If you’d like to highlight something other than the subject – the action, for example – passive voice can be a good choice:</div><div class="first-para"><i>He was born on January 3, 1972.</i><br /><i>The employees were laid off during the third quarter.</i></div><div class="last-para">In all other cases, avoid passive voice.</div><h3>Provide guideposts for your reader.</h3><div class="first-para">Help your reader by providing signals and guideposts. Transitional words and phrases (such as <i>and, furthermore, even so, </i>and <i>therefore</i>) work to connect your thoughts and indicate what’s to come. Another way to create transitions is to repeat a word or a phrase from the preceding paragraph.</div><div class="para">When a paragraph or section contains several different points, numbering them (<i>first, second, </i>etc.) makes them clearer. Headers, lists, and bullets also help organize your thoughts for the reader.</div><div class="para">Finally, make your reader’s job easier by following the principle of parallel construction. Parallel construction means beginning each item in a list with the same part of speech (<i>the art of advertising, the science of accounting, and the mystery of marketing – </i>each item begins with a noun). This helps alert readers to the similarities or connections between things. If you introduce words or phrases with a preposition, include the preposition either only with the first item or with each of the items.</div><div class="first-para"><i>Parallel:</i> This book is for investors, managers, salespeople, and executives.</div><div class="para"><i>Parallel:</i> This book is for investors, for managers, for salespeople, and for executives.</div><div class="last-para"><i>Not parallel:</i> This book is for investors, managers, salespeople, and for executives.</div><div class="para">It also helps to put related words together:</div><div class="first-para"><i>Confusing:</i> Investors in the 1930s hurt by the crash acted cautiously.</div><div class="last-para"><i>Better:</i> Investors hurt by the crash in the 1930s acted cautiously.</div><div class="last-para">This kind of positioning makes sentences easier to understand.</div><h3>Use strong endings.</h3><div class="first-para">Use firm endings; don’t go on and on and weaken your point. Use direct, strong statements<span style="color: red;">. </span>End by restating your major points or the benefits of following your recommendations.</div><h3>Let it sit for a while.</h3><div class="first-para">If possible, let your writing sit overnight. At least, an hour or two away from the document will allow you to approach it with a fresh eye and to edit more effectively.</div><div class="last-para">Separate editing from writing. With writing, it’s best to get your thoughts out rather than agonize over every detail.</div><h3>Don't rely on a grammar- or spell-checker.</h3><div class="first-para">Edit and review your documents yourself, and don’t rely on a grammar- or spell-checker. In particular, a spell-checker won’t recognize a legitimate word used incorrectly (<i>to </i>vs.<i> too,</i> for example).</div><h3>Proofread, proofread, proofread.</h3><div class="first-para">You can’t proofread something too many times.</div><h3>When in doubt, just start writing.</h3><div class="first-para">If all of this seems too difficult, just start writing. As long as you have a basic idea of what you want to say, you can organize and polish later.<br /><div><br /></div><div></div></div></div>

Chapter 1:  Writing Well For Business Some General Guidelines Know why you're writing.  Before you begin writing, know what you want to ...

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<div dir="ltr" style="text-align: left;" trbidi="on"><br /><div align="center" class="MsoNormal" style="margin-bottom: 0in; text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 20pt;">Comparision Between Developed And Underdeveloped Countries</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">A developed country is a sovereign state which has a highly developed economy and advanced technological infrastructure relative to other less developed nations. Most commonly the criteria for evaluating the degree of economic development is gross domestic product (GDP), the per capita income, level of industrialization, amount of widespread infrastructure and general standard of living.[1] Which criteria is to be used and which countries are classified as being developed is a contentious issue.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Developed countries have post-industrial economies, meaning the service sector provides more wealth than the industrial sector. They are contrasted with developing countries, which are in the process of industrialization, or undeveloped countries, which are pre-industrial and almost entirely agrarian</span></div><div align="center" class="MsoNormal" style="margin-bottom: 0in; text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 16pt;">Developed Country</span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"></span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif";"><span style="font-size: 10pt;"> </span><span style="font-size: large;">Widespread poverty :</span></span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The most important feature of the under­developed countries is general poverty. Poverty is the fundamental malady. The per capita income in these countries is very low in comparison to the other developed countries such as the U.S.A., West Germany, France, Canada, etc. For instance, per capita income in the United States and Canada was 58 times and 56 times of the per capita income of India in 1977. "The collective per capita income of the underdeveloped countries average less than one-fourteenth of the per capita income of the rich nations."</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The consumption of protein also is more than double in the former than in the latter. In the consumption of non-essential and semi-luxury goods also there are glaring disparities in the levels of per capita consumption. Thus, most of the developing countries are characterised by widespread poverty, hunger, malnutrition, ill-health, diseases and low life expectancy.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The disparity between the developing and the developed countries is widening because of a slower growth rate in the former than the latter. This has added a new dimension' to the problem of underdevelopment in the recent years. In 1977, the developing countries, excluding the oil-producers—with 53 per cent of world population, accounted for only 17 per cent of world GNP. According to 1978 World Bank Atlas the industrialised countries commanded over 63 per cent of world GNP with only 17 per cent of world population.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-size: large;"><br /></span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: large;"> Heavy reliance on agriculture :</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">68% population in Pakistan is living in 46,894 villages, back-ward agriculture is the major occupation of the population. Agriculture sector is back ward due to old and traditional methods of cultivation. In-efficient farmers, tack of credit facilities, unorganized agriculture market etc. 66.7% population is directly or indirectly depending on agriculture sector in Pakistan.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Although agriculture is the main occupation in these countries, yet strangely agricultural techniques are usually primitive, inefficient and out­dated. Agriculture happens to be an overcrowded depressed industry. Agricultural productivity is extremely low. This is reflected in the fact that the share of agriculture in the total employment is disproportionately larger than its share in the national income.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">In recent years modern farm technology has been increasingly adopted in these countries. However, the average yield is still much lower than in the developed countries. The paradox is that agriculture in an industrially developed country is much more advanced than in a developing economy. Backward agriculture is a symptom of poverty leading to malnutrition, seasonal hunger and disguised unemployment.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif";"><span style="font-size: 10pt;"> </span><span style="font-size: large;">Capital deficiency :</span></span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The deficiency of capital in an important feature of developing countries. Therefore they are often called capital poor economies. The shortage of capital is reflected in the very low capital labour ratio in these countries.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">A striking feature of the underdeveloped countries is capital deficiency. An underdeveloped economy has been rightly designated as a "capital poor economy." As Oscar Lange put it, "An underdeveloped economy is an economy in which the available stock of capital goods is not sufficient to employ the total available labour force on the basis of modern techniques of production." The amount of capital per head is very low. Insufficiency of capital equipment per head explains the low level of productivity per worker. The capital deficiency is also reflected in the form of low rate of capital formation. Thus, if the rate of capital formation in a developed country is as high as 30 per cent, in a less developed country it may be 10 to 15 per cent.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: large;">Exports of Primary Goods:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The primary and agricultural products are the main exports of these countries. The international trade. For example the main exports products of Pakistan are rice, cotton yarn, fish and garments etc.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Natural Resources:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Mostly there is shortage of natural resources in developing nations and this is also a cause of their economic backwardness. In various poor countries natural resources are available but they remain un- utilized under-utilized and miss- utilized due to capital shortage, less efficiency of labour, lack of skill and knowledge and limited home market.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Out Flow of Best Brain:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The brilliant and brightest students of developing countries go to developed countries for higher education. After completing their education, they do not want to come back in their own country due to un-satisfaction with low salaries and material comforts, Therefore, they remain in search of better jobs in foreign countries.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Inflation:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">High rate of inflation in poor nations causes economic backwardness. Due to high level of price, purchasing power and saving of the consumers tend to decrease. Rate of inflation is 13.3 in 2009 in Pakistan.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Capital formation:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">In developing countries the per capita income is very low as compared to the developed countries. So their savings and investments are also low. Due to low savings and investments capital formation rate is also low. Per capital income of Pakistan is $1051 but it is more than $24000 in developed countries,</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">High Degree of Illiteracy:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The illiteracy rate is high in developing countries as compared to developed countries as compared to developing countries. The illiterate persons do not know the importance of economic development. Pakistan literacy rate is 57% while in advanced countries; it is near to 100%.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div align="center" class="MsoNormal" style="margin-bottom: 0in; text-align: center;"><span style="font-family: "Arial","sans-serif"; font-size: 16pt;">Underdeveloped countries</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">INTRODUCTION:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">There are so many causes of under development. Causes of under development are not same in all under developing nation states, somewhere corruption is the major cause, somewhere lack in resources are the major cause, and somewhere wrong policies are the major cause of under development. But the most common cause of under development is the dependency upon developed countries, and terrorism.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">STRUGGLE FOR THE IMPROVEMENT:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Since the end of World War II, we have been experiencing a worldwide struggle for the improvement of living conditions in the so-called developing countries.During the early period of development efforts there was little discussion on the historical causes and the real nature of underdevelopment. Theoretical considerations at this time of "cold war" explained the situation of underdevelopment and the path for development from the viewpoint of western or socialist metropoles. Only in more recent times has the viewpoint of developing countries gained momentum in development theory. This has</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">great practical implications: development theory offers the justification for policies. The answer to the question "What is development?" determines which strategies, policies, projects, what type of industry, or what organization of agriculture should be considered to be in line with development goals or detrimental to these. Different positions in development policy are based on differences in underlying development theories.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">CORRUPTION:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Corruption defined as 'the abuse of public power for personal ends' has always existed. During recent decades, however, it has grown both in terms of geographic extent and intensity. Since the mid 1970s, it has infiltrated virtually every country in the world. It was hoped that the easing of political and economic restrictions that characterized the 1990s after the end of the Cold War would have gone some way to reducing this phenomenon. Through increased openness resulting from political pluralism and the freedom of the press, the process of democratization should, under normal circumstances, mobilize efforts to overcome corruption. However, emergent democracies are still fragile and seem to find the task of tackling established self-interests a formidable one [4]</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">POLITICAL CORRUPTION:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">In broad terms, political corruption is when government officials use their governmental powers for illegitimate private gain. Misuse of government power for other purposes, like repression of political opponents and general police brutality, is not considered political corruption. Illegal acts by private persons or corporations not directly involved with the government is not considered political corruption either. Illegal acts by officeholders constitute political corruption only if the acts are directly related to their official duties.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">All forms of government are susceptible to political corruption. Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and trafficking, it is not restricted to these organized crime activities. In some nations corruption is so common that it is expected when ordinary businesses or citizens interact with government officials. The end-point of political corruption is a kleptocracy, literally "rule by thieves".</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">What constitutes illegal corruption differs depending on the country or jurisdiction. Certain political funding practices that are legal in one place may be illegal in another. In some countries, government officials have broad or not well defined powers, and the line between what is legal and illegal can be difficult to draw.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">ECONOMIC IN-JUSTICE:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Economic injustice involves the state's failure to provide individuals with basic necessities of life, such as access to adequate food and housing, and its maintenance of huge discrepancies in wealth. In the most extreme cases of misdistribution, some individuals suffer from poverty while the elite of that society live in relative luxury. Such injustice can stem from unfair hiring procedures, lack of available jobs and education, and insufficient health care. All of these conditions may lead individuals to believe that they have not received a "fair share" of the benefits and resources available in that society. [6]</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Poverty :</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Poverty in Pakistan is an increasing social problem and represents the critical challenge to be addressed by the Government of Pakistan. It is estimated that about 32% of Pakistan's population are below the food poverty line rising from a level of 26% in 1988 (GoP, 2002), and about 44% are below the poverty line on the human poverty index (UNDP, 2002). The implication here is that a significant proportion of Pakistan's population does not have adequate levels of food, access to basic services and opportunities and hence are particularly vulnerable to economic, environmental and political shocks. Add to this the fact that 65% of Pakistan's population lives in rural areas and it is here that the bulk of Pakistan’s poor (about two-thirds) are found.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">More importantly, it has now become increasingly apparent that a critical dimension of poverty has not been given sufficient attention..</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">TERRORISM:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Terrorism is another cause of underdevelopment, where terrorism exists the process of development stopped. Foreign investments, trade, and exchange of goods & services which are the keys for underdeveloped states are stopped because of terrorists activities.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Terrorism is a controversial term with no internationally agreed single definition. There are however several International conventions on terrorism with somewhat different definitions. In one modern sense, it is violence against civilians to achieve political or ideological objectives by creating fear. Most common definitions of terrorism include only those acts which are intended to create fear (terror), are perpetrated for an ideological goal (as opposed to a lone attack), and deliberately target or disregard the safety of non-combatants. Some definitions also include acts of unlawful violence and war.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Terrorism has been used by a broad array of political organizations in furthering their objectives; both right-wing and left-wing political parties, nationalistic, and religious groups, revolutionaries and ruling governments.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">ILLITERACY:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Literacy is defined as persons aged 15 or above who can “read” and “write”.According to this definition, Pakistanis officially reported to have 50% literacy rate. Which means half of its population is illiterate. With such family backgrounds, inflation, poverty and child labor this rate is expected to increase in future. Even for those who are termed as “Literate” are only able to read and write, which in today’s technology oriented world is still considered as illiteracy. Majority of the people forming the top controlling tier is almost unaware of technologies and technical mindset. Thus, causing the country to adopt the new technologies at a snail’s speed.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Agriculture, the main occupation:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Most under developed countries are predominantly agricultural. A great maturity of population is engaged in agriculture and allied occupations. This excessive dependence is due to the fact that non-agricultural occupations have not grown at a rate compared with the increase in population. Hence, the growing labour force has to be absorbed in agriculture sector.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Technical backwardness:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Under developing countries are also in the backward state of technology which is reflected high cost of production, high labour output and capital output rates, general low productivity, unskilled and untrained workers, thus, it may be pointed out that technological backwardness is not only the cause of economic backwardness but it is also the result of it.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">External Resources dependence:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The international trade, political activities and other economic activities are under the influence of other advanced countries in less developed countries. Their development plans are financed by the loans giving countries: these plans are made to serve the interests of foreign countries. So, poor nations are loans and grants receiving nations.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Rare Collection:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The developing countries do not have such a huge capital or investment that they can produce large number of basic needs of life. Rate of production is also low in developing countries. It is due to rare collection in the country.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Inadequate infrastructure:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">To enhance the process of economic development, proper infrastructure is needed which is not available in poor economies. In these nations: roads, transport, telecommunication, sanitation, health and education facilities are not at their best level. Government has reserved an amount of Rs,133 billions to develop the infrastructure.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Social Aspects:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Under developed countries have also some factors such as joint family system, cast system, cultural and religious views, beliefs and values that badly affect their economic development.32.17% population is working population and remaining 67.83% population is depending on them in Pakistan.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Trade deficit:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Undeveloped countries usually exports raw material but import finished goods. The price of raw material is low but the price of finished goods is high. So, balance of payment is unfavorable. In Pakistan, deficit balance of trade was $ 3.5 billion in 2009.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Influence of feudal lords:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">In lower developed nations, the poor class is under the influence of feudal lords and tribal heads. The feudal lords want to keep the people backward and do not appreciate the development of the poor. About 50.8% poor borrow from land lords and 57.4% poor are working for feudal lords without wages in Pakistan.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Circle of poverty:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The main cause of under developed countries remaining poor and under developed is that they are caught up in the vicious circle of poverty. It is because of their per capita income is low, low saving and investment, lack of capital, low purchasing power, low productivity thus the vicious circle is completed and a country remain poor because it is poor.</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><br /></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">CONCLUSION:</span></div><div class="MsoNormal" style="margin-bottom: 0in;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">The reason behind the underdevelopment of underdeveloped states is the lack of determination, if people and the Government work together for the better future of their nation they can do, but problem is this who to start and where to start because the system is very weak. I believe developed states not guide properly to underdeveloped nations, developed nations take them as their competitor. Yes, underdeveloped states can be developed with the help of proper utilization of wealth, resources, and labor. The main focus of underdeveloped states should be on the education of their people, because educated people and skilled people can play the fruitful role in the development of nation.</span><br /><div><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><br /></span></div></div></div>

Comparision Between Developed And Underdeveloped Countries A developed country is a sovereign state which has a highly developed economy and...

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<div dir="ltr" style="text-align: left;" trbidi="on"><br /><h2><span style="font-size: x-large;">What Is Banking ?</span></h2><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Due to their critical status within the financial system and the economy generally, banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accords.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.^[1]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banking in the modern sense of the word can be traced to medieval and early Renaissance Italy, to the rich cities in the north like Florence, Venice and Genoa. The Bardi and Peruzzi families dominated banking in 14th century Florence, establishing branches in many other parts of Europe.^[2] Perhaps the most famous Italian bank was the Medici bank, set up by Giovanni Medici in 1397.^[3] The earliest known state deposit bank,<i>Banco di San Giorgio</i> (Bank of St. George), was founded in 1407 at Genoa, Italy.^[4]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><b><span style="font-size: x-large;">Origin of the word</span></b><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The word <i>bank</i> was borrowed in Middle English from Middle French <i>banque</i>, from Old Italian <i>banca</i>, from Old High German <i>banc, bank</i> "bench, counter". Benches were used as desks or exchange counters during theRenaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.^[5]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">One of the oldest items found showing money-changing activity is a silver Greek drachm coin from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC, presented in the British Museum in London. The coin shows a banker's table (<i>trapeza</i>) laden with coins, a pun on the name of the city. In fact, even today in Modern Greek the word Trapeza (<i>Τράπεζα</i>) means both a table and a bank.<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"><b><span style="font-size: large;">Definition</span></b><o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The definition of a bank varies from country to country. See the relevant country page (below) for more information.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:^[6]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;"><b>§<span style="line-height: normal;">  </span>conducting current accounts for his customers<o:p></o:p></b></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;"><b>§<span style="line-height: normal;">  </span>paying cheques drawn on him, and<o:p></o:p></b></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;"><b>§<span style="line-height: normal;">  </span></b><b>collecting cheques for his customers</b>.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation tonegotiable instruments, including cheques, and this Act contains a statutory definition of the term <i>banker</i>:<i>banker</i> includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is organized or regulated.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the <i>business of banking</i> or <i>banking business</i>. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>"banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>"banking business" means the business of either or both of the following:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">1.<span style="line-height: normal;">   </span>receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">2.<span style="line-height: normal;">   </span>paying or collecting checks drawn by or paid in by customers^[7]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect checks.<o:p></o:p></span><br /><span style="font-family: Verdana, sans-serif;"><br /></span><span style="font-family: Verdana, sans-serif;"><br /></span><span style="font-family: Verdana, sans-serif;"><br /></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Banking</span></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Standard activities</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks act as payment agents by conducting checking or current accounts for customers, paying checks drawn by customers on the bank, and collecting checks deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as Automated Clearing House (ACH), Wire transfers or telegraphic transfer,EFTPOS, and automated teller machine (ATM).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings too.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="color: black; font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Channels</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks offer many different channels to access their banking and other services:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Automated Teller Machines<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>A branch is a retail location<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Call center<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Mail: most banks accept cheque deposits via mail and use mail to communicate to their customers, e.g. by sending out statements<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Mobile banking is a method of using one's mobile phone to conduct banking transactions<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Online banking is a term used for performing transactions, payments etc. over the Internet<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Relationship Managers, mostly for private banking or business banking, often visiting customers at their homes or businesses<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Telephone banking is a service which allows its customers to perform transactions over the telephone with automated attendant or when requested with telephone operator<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Video banking can be performed via purpose built banking transaction machines (similar to an Automated teller machine), or via a video conference enabled bank branch.clarification<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Business model</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">A bank can generate revenue in a variety of different ways including interest, transaction fees and financial advice. The main method is via charging interest on the capital it lends out to customers^.The bank profits from the difference between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">This difference is referred to as the <i>spread</i> between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclical and dependent on the needs and strengths of loan customers and the stage of the economic cycle. Fees and financial advice constitute a more stable revenue stream and banks have therefore placed more emphasis on these revenue lines to smooth their financial performance.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">In the past 20 years American banks have taken many measures to ensure that they remain profitable while responding to increasingly changing market conditions. First, this includes the Gramm-Leach-Bliley Act, which allows banks again to merge with investment and insurance houses. Merging banking, investment, and insurance functions allows traditional banks to respond to increasing consumer demands for "one-stop shopping" by enabling cross-selling of products (which, the banks hope, will also increase profitability).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Second, they have expanded the use of risk-based pricing from business lending to consumer lending, which means charging higher interest rates to those customers that are considered to be a higher credit risk and thus increased chance of default on loans. This helps to offset the losses from bad loans, lowers the price of loans to those who have better credit histories, and offers credit products to high risk customers who would otherwise be denied credit.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Third, they have sought to increase the methods of payment processing available to the general public and business clients. These products include debit cards, prepaid cards, smart cards, and credit cards. They make it easier for consumers to conveniently make transactions and smooth their consumption over time (in some countries with underdeveloped financial systems, it is still common to deal strictly in cash, including carrying suitcases filled with cash to purchase a home).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">However, with convenience of easy credit, there is also increased risk that consumers will mismanage their financial resources and accumulate excessive debt. Banks make money from card products through interest payments and fees charged to consumers andtransaction fees to companies that accept the credit- debit - cards. This helps in making profit and facilitates economic development as a whole.^[9]<o:p></o:p></span></div><div align="center" class="MsoNormal" style="background-color: #f9f9f9; line-height: 14.25pt; margin-bottom: 0in; text-align: center;"><span style="color: black; font-family: Verdana, sans-serif;"><br /></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Retail banking</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Checking account<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Savings account<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Money market account<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Certificate of deposit (CD)<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Individual retirement account (IRA)<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Credit card<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Debit card<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Mortgage<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Home equity loan<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Mutual fund<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Personal loan<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Time deposits<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;">Business (or commercial/investment) banking<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Business loan<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Capital raising (Equity / Debt / Hybrids)<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Mezzanine finance<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Project finance<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Revolving credit<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Risk management (FX, interest rates, commodities, derivatives)<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Term loan<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Cash Management Services (Lock box, Remote Deposit Capture, Merchant Processing)<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;">Risk and capital<o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks face a number of risks in order to conduct their business, and how well these risks are managed and understood is a key driver behind profitability, and how much capital a bank is required to hold. Some of the main risks faced by banks include:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Credit risk: risk of loss arising from a borrower who does not make payments as promised.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Liquidity risk: risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss (or make the required profit).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Market risk: risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Operational risk: risk arising from execution of a company's business functions.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Reputational risk: a type of risk related to the trustworthiness of business.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The capital requirement is a bank regulation, which sets a framework on how banks and depository institutions must handle their capital. The categorization of assets and capital is highly standardized so that it can be risk weighted (see risk-weighted asset).<br /><o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Banks in the economy</span><o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Economic functions</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The economic functions of banks include:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">1.<span style="line-height: normal;">   </span>Issue of money, in the form of banknotes and current accounts subject to check or payment at the customer's order. These claims on banks can act as money because they are negotiable or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a check that the payee may bank or cash.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">2.<span style="line-height: normal;">   </span>Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economize on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">3.<span style="line-height: normal;">   </span>Credit intermediation – banks borrow and lend back-to-back on their own account as middle men.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">4.<span style="line-height: normal;">   </span>Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">5.<span style="line-height: normal;">   </span>Maturity transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemption of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">6.<span style="line-height: normal;">   </span>Money creation – whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of virtual money is created.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Bank crisis</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks are susceptible to many forms of risk which have triggered occasional systemic crises. These include liquidity risk (where many depositors may request withdrawals in excess of available funds), credit risk (the chance that those who owe money to the bank will not repay it), and interest rate risk (the possibility that the bank will become unprofitable, if rising interest rates force it to pay relatively more on its deposits than it receives on its loans).<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banking crises have developed many times throughout history, when one or more risks have materialized for a banking sector as a whole. Prominent examples include the bank run that occurred during the Great Depression, the U.S. Savings and Loan crisis in the 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the sub-prime mortgage crisis in the 2000s.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;">[edit]Size of global banking industry<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record $96.4 trillion while profits declined by 85% to $115bn. Growth in assets in adverse market conditions was largely a result of recapitalization. EU banks held the largest share of the total, 56% in 2008/2009, down from 61% in the previous year. Asian banks' share increased from 12% to 14% during the year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment banking totaled $66.3bn in 2009, up 12% on the previous year.^[10]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The United States has the most banks in the world in terms of institutions (7,085 at the end of 2008) and possibly branches (82,000).^{[<i>citation needed</i>]} This is an indicator of the geography and regulatory structure of the USA, resulting in a large number of small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks have in excess of 67,000 branches (ICBC:18000+,BOC:12000+, CCB:13000+, ABC:24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches—more than double the 15,000 branches in the UK.^[10]<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><br /><br /></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Currently commercial banks are regulated in most jurisdictions by government entities and require a special bank license to operate.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Usually the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to the customer's order—although money lending, by itself, is generally not included in the definition.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Unlike most other regulated industries, the regulator is typically also a participant in the market, being either a publicly or privately governedcentral bank. Central banks also typically have a monopoly on the business of issuing banknotes. However, in some countries this is not the case. In the UK, for example, the Financial Services Authority licenses banks, and some commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to those issued by the Bank of England, the UK government's central bank.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banking law is based on a contractual analysis of the relationship between the <i>bank</i> (defined above) and the <i>customer</i>—defined as any entity for which the bank agrees to conduct an account.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The law implies rights and obligations into this relationship as follows:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">1.<span style="line-height: normal;">   </span>The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">2.<span style="line-height: normal;">   </span>The bank agrees to pay the customer's checks up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">3.<span style="line-height: normal;">   </span>The bank may not pay from the customer's account without a mandate from the customer, e.g. a check drawn by the customer.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">4.<span style="line-height: normal;">   </span>The bank agrees to promptly collect the checks deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">5.<span style="line-height: normal;">   </span>The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">6.<span style="line-height: normal;">   </span>The bank has a lien on checks deposited to the customer's account, to the extent that the customer is indebted to the bank.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">7.<span style="line-height: normal;">   </span>The bank must not disclose details of transactions through the customer's account—unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">8.<span style="line-height: normal;">   </span>The bank must not close a customer's account without reasonable notice, since checks are outstanding in the ordinary course of business for several days.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Some types of financial institution, such as building societies and credit unions, may be partly or wholly exempt from bank license requirements, and therefore regulated under separate rules.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The requirements for the issue of a bank license vary between jurisdictions but typically include:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">1.<span style="line-height: normal;">   </span>Minimum capital<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">2.<span style="line-height: normal;">   </span>Minimum capital ratio<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">3.<span style="line-height: normal;">   </span>'Fit and Proper' requirements for the bank's controllers, owners, directors, or senior officers<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 38.4pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">4.<span style="line-height: normal;">   </span>Approval of the bank's business plan as being sufficiently prudent and plausible.<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Types of banks</span><o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif; font-size: large;">Types of retail banks<o:p></o:p></span></div><div align="center" class="MsoNormal" style="background-color: #f9f9f9; line-height: 14.25pt; margin-bottom: 0in; text-align: center;"><span style="color: black; font-family: Verdana, sans-serif;"><br /></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Community banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Community development banks: regulated banks that provide financial services and credit to under-served markets or populations.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Credit unions: not-for-profit cooperatives owned by the depositors and often offering rates more favorable than for-profit banks. Typically, membership is restricted to employees of a particular company, residents of a defined neighborhood, members of a certain labor union or religious organizations, and their immediate families.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Postal savings banks: savings banks associated with national postal systems.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Private banks: banks that manage the assets of high net worth individuals. Historically a minimum of USD 1 million was required to open an account, however, over the last years many private banks have lowered their entry hurdles to USD 250,000 for private investors.^{[<i>citation needed</i>]}<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Savings bank: in Europe, savings banks took their roots in the 19th or sometimes even in the 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks were created on public initiative; in others, socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly decentralized distribution network, providing local and regional outreach—and by their socially responsible approach to business and society.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Building societies and Landesbanks: institutions that conduct retail banking.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>A Direct or Internet-Only bank is a banking operation without any physical bank branches, conceived and implemented wholly with networked computers.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Types of investment banks</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital market activities such as mergers and acquisitions.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;">Both combined<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Universal banks, more commonly known as financial services companies, engage in several of these activities. These big banks are very diversified groups that, among other services, also distribute insurance— hence the term bancassurance, a portmanteau word combining "banque or bank" and "assurance", signifying that both banking and insurance are provided by the same corporate entity.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Other types of banks</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Central banks are normally government-owned and charged with quasi-regulatory responsibilities, such as supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around several well-established principles based on Islamic canons. All banking activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on the financing facilities that it extends to customers.</span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">In the United States, the banking industry is a highly regulated industry with detailed and focused regulators. All banks with FDIC-insured deposits have the Federal Deposit Insurance Corporation (FDIC) as a regulator; however, for examinations,^{[<i>clarification needed</i>]} the Federal Reserve is the primary federal regulator for Fed-member state banks; the Office of the Comptroller of the Currency (OCC) is the primary federal regulator for national banks; and the Office of Thrift Supervision, or OTS, is the primary federal regulator for thrifts. State non-member banks are examined by the state agencies as well as the FDIC. National banks have one primary regulator—the OCC. Qualified Intermediaries & Exchange Accommodators are regulated by MAIC.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Each regulatory agency has their own set of rules and regulations to which banks and thrifts must adhere.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as a formal inter-agency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions. Although the FFIEC has resulted in a greater degree of regulatory consistency between the agencies, the rules and regulations are constantly changing.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">In addition to changing regulations, changes in the industry have led to consolidations within the Federal Reserve, FDIC, OTS, MAIC and OCC. Offices have been closed, supervisory regions have been merged, staff levels have been reduced and budgets have been cut. The remaining regulators face an increased burden with increased workload and more banks per regulator. While banks struggle to keep up with the changes in the regulatory environment, regulators struggle to manage their workload and effectively regulate their banks. The impact of these changes is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures across the United States.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. A rising interest rate environment may seem to help financial institutions, but the effect of the changes on consumers and businesses is not predictable and the challenge remains for banks to grow and effectively manage the spread to generate a return to their shareholders.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">The management of the banks’ asset portfolios also remains a challenge in today’s economic environment. Loans are a bank’s primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. While always an issue for banks, decliningasset quality has become a big problem for financial institutions. There are several reasons for this, one of which is the lax attitude some banks have adopted because of the years of “good times.” The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in some cases depth of management. Problems are more likely to go undetected, resulting in a significant impact on the bank when they are recognized. In addition, banks, like any business, struggle to cut costs and have consequently eliminated certain expenses, such as adequate employee training programs.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Banks also face a host of other challenges such as aging ownership groups. Across the country, many banks’ management teams and board of directors are aging. Banks also face ongoing pressure by shareholders, both public and private, to achieve earnings and growth projections. Regulators place added pressure on banks to manage the various categories of risk. Banking is also an extremely competitive industry. Competing in the financial services industry has become tougher with the entrance of such players as insurance agencies, credit unions, check cashing services, credit card companies, etc.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">As a reaction, banks have developed their activities in financial instruments, through financial market operations such as brokerage and MAIC trust & Securities Clearing services trading and become big players in such activities.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;">Competition for loanable funds<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">To be able to provide home buyers and builders with the funds needed, banks must compete for deposits. The phenomenon ofdisintermediation had to dollars moving from savings accounts and into direct market instruments such as U.S. Treasury obligations, agency securities, and corporate debt. One of the greatest factors in recent years in the movement of deposits was the tremendous growth of money market funds whose higher interest rates attracted consumer deposits.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">To compete for deposits, US savings institutions offer many different types of plans:<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Passbook or ordinary deposit accounts — permit any amount to be added to or withdrawn from the account at any time.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>NOW and Super NOW accounts — function like checking accounts but earn interest. A minimum balance may be required on Super NOW accounts.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Money market accounts — carry a monthly limit of preauthorized transfers to other accounts or persons and may require a minimum or average balance.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Certificate accounts — subject to loss of some or all interest on withdrawals before maturity.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Notice accounts — the equivalent of certificate accounts with an indefinite term. Savers agree to notify the institution a specified time before withdrawal.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Individual retirement accounts (IRAs) and Keogh plans — a form of retirement savings in which the funds deposited and interest earned are exempt from income tax until after withdrawal.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Checking accounts — offered by some institutions under definite restrictions.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>All withdrawals and deposits are completely the sole decision and responsibility of the account owner unless the parent or guardian is required to do otherwise for legal reasons.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 1.2pt; margin-left: 19.2pt; text-indent: -0.25in;"><span style="color: black; font-family: Verdana, sans-serif;">§<span style="line-height: normal;">  </span>Club accounts and other savings accounts — designed to help people save regularly to meet certain goals.<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"> Accounting for bank accounts<o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and MAIC there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit a <i>credit account</i> to increase its balance, and you debit a <i>credit account</i> to decrease its balance.^[12]<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">This also means you credit your savings account every time you deposit money into it (and the account is normally in credit), while you debit your credit card account every time you spend money from it (and the account is normally in debit). However, if you read your bank statement, it will say the opposite—that you credit your account when you deposit money, and you debit it when you withdraw funds. If you have cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have a negative (or deficit) balance.<o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">Where bank transactions, balances, credits and debits are discussed below, they are done so from the viewpoint of the account holder—which is traditionally what most people are used to seeing.</span><br /><span style="font-family: Verdana, sans-serif;"></span><br /><a name='more'></a><span style="font-family: Verdana, sans-serif;"><br /></span><span style="font-family: Verdana, sans-serif;"><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin-bottom: 0.05in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;"></span></span><br /><span style="font-family: Verdana, sans-serif;"><span style="font-size: large;">Brokered deposits</span><o:p></o:p></span></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">One source of deposits for banks is brokers who deposit large sums of money on the behalf of investors through MAIC or other trust corporations. This money will generally go to the banks which offer the most favorable terms, often better than those offered local depositors. It is possible for a bank to engage in business with no local deposits at all, all funds being brokered deposits. Accepting a significant quantity of such deposits, or "hot money" as it is sometimes called, puts a bank in a difficult and sometimes risky position, as the funds must be lent or invested in a way that yields a return sufficient to pay the high interest being paid on the brokered deposits. This may result in risky decisions and even in eventual failure of the bank. Banks which failed during 2008 and 2009 in the United States during the global financial crisis had, on average, four times more brokered deposits as a percent of their deposits than the average bank. Such deposits, combined with risky real estate investments, factored into the Savings and loan crisis of the 1980s. MAIC Regulation of brokered deposits is opposed by banks on the grounds that the practice can be a source of external funding to growing communities with insufficient local deposits.<o:p></o:p></span></div><div style="background-color: white; border: none; padding: 0in 0in 2pt;"><div class="MsoNormal" style="border: none; line-height: 14.25pt; margin-bottom: 0.1in; padding: 0in;"><span style="font-family: Verdana, sans-serif;"><span style="font-size: x-large;">Globalization in the Banking Industry</span><o:p></o:p></span></div></div><div class="MsoNormal" style="background-color: white; line-height: 14.25pt; margin: 4.8pt 0in 6pt;"><span style="font-family: Verdana, sans-serif;">In modern time there has been huge reductions to the barriers of globalcompetition in the banking industry. Increases in telecommunications and otherfinancial technologies, such as Bloomberg, have allowed banks to extend theirreach all over the world, since they no longer have to be near customers tomanage both their finances and their risk. The growth in cross-borderactivities has also increased the demand for banks that can provide variousservices across borders to different nationalities. However, despite thesereductions in barriers and growth in cross-border activities, the bankingindustry is nowhere near as globalized as some other industries. In the USA,for instance, very few banks even worry about the Riegle-Neal Act, whichpromotes more efficient interstate banking. In the vast majority of nationsaround globe the market share for foreign owned banks is currently less than atenth of all market shares for banks in a particular nation. One reason thebanking industry has not been fully globalized is that it is more convenient tohave local banks provide loans to small business and individuals. On the otherhand for large corporations, it is not as important in what nation the bank isin, since the corporation's financial information is available around theglobe. A Study of Bank Nationality and reach</span></div></div>

What Is Banking ? A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lend...

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